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Great Again: Revitalizing America’s Entrepreneurial Leadership


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: June 15, 2011 @ 6:05 pm
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Pat Choate and Hank Nothhaft, at the Met Club, June 14, 2011.

I was lucky enough to receive a review copy of Great Again several months before it became available. I have also had the pleasure of getting to know Hank Nothhaft and his co-author David Kline over the past year or so, frequently exchanging e-mails discussing a variety of innovation and patent related issues. It has been exceptionally difficult to keep quiet knowing what Hank and David were writing about, and then reading the nearly finished manuscript. Simply put, everyone in the innovation industry and patent community needs to read Great Again. Every Staffer on Capitol Hill and everyone working in the White House needs to read Great Again. While Members of Congress are no doubt busy with a great many things, they too should read Great Again, but at the very least Members of Congress and those in the Executive Branch, including President Obama, should at a minimum read the Introduction, which is just 12 pages long.

Last night at the Metropolitan Club in Washington, D.C., a whose-who of the intellectual property world came out to a book signing and reception to honor Henry Nothhaft, the author of Great Again.  The reception was sponsored by Federal Circuit Chief Judge Paul Michel (ret.) and Pat Choate, the renowned economist and former Vice Presidential candidate.  Those in attendance included David Kappos (Under Secretary of Commerce and Director of the USPTO), Federal Circuit Judge Sharon Prost, Herb Wamsley (Executive Director of IPO) and Manus Cooney (principle in American Continental Group).

Met Club, June 14, 2011. From L to R: Pat Choate, Hank Nothhaft, David Kappos, Chief Judge Michel, Manus Cooney.

In brief remarks to the assembled crowd, Choate explained that Great Again is “a blue print on how to improve our economy.” Judge Michel, who also briefly spoke, noted that “it always takes a leader to have a movement.”  Both Choate and Michel are correct, and Nothhaft is indeed taking up the mantel of leadership on the issue. In order to pursue the mission of gaining attention for the intellectual property and innovation issues holding back the U.S. economy Nothhaft has recently stepped down as CEO of Tessera.  As a result there will be no actual or potential conflict of interest, so he can speak his mind freely without any fiduciary responsibilities to the company or its shareholders.

Prior to the event last night I asked Nothhaft why he was thrusting himself so thoroughly into the innovation debate. He explained:

Fundamentally I remain a lifelong idealist who feels a sense of wonderment, thankfulness and obligation to the USA for what I view a wonderful way of life and a meritocracy. I have been blessed with a lifetime of opportunities which have allowed me to achieve a fulfilling career and my American Dream. I believe that the current one size fits all government, short-termism and sense of entitlement are threatening to weaken or radically change the American system. At this crucial moment, I decided to lend my efforts to try to effect the outcome, particularly patent legislation and reforming and funding the USPTO. I feel blessed to be in a position to dedicate my time to this effort. This is sort of where I started out when I entered the Naval Academy and volunteered to join the U.S. Marines. I never would have become a Marine or an entrepreneur if I didn’t believe the impossible is possible.

The U.S. economy is flailing, jobs are hemorrhaging, and it is taking far longer to pull ourselves out of the grips of the Great Recession than anyone would like.  But now it seems Judge Michel, who himself left the Federal Circuit to speak his mind, has an important alley — a former Marine Captain who served in Vietnam and a serial and very successful entrepreneur who has created over 6,000 jobs and returned some $8 billion to investors who invested in his companies.

Chief Judge Michel and Hank Nothhaft, June 14, 2011.

The magnitude of the problems facing our economy cannot be overstated.  Neither can it be overstated that a coherent national innovation policy is the answer to what ails the U.S. economy.  As Hank explains in the Introduction, “for the first time in our history, the connection between technological innovation and job creation has broken down. And for the first time also, the wealth created by innovation is going mostly just to a handful of founders and venture capitalists rather than to many thousands of employees, not to mention the community at large.”  Through mismanagement and misapplication of tax, immigration and patent policies our leaders in Washington, D.C. have done us no favors.  Speaking at the reception last night Nothhaft explained: “We live in the greatest country in the world and we seem bent on tying our arms behind our backs.”  That has to change.

A central and often repeated theme of  Great Again is that America’s decision to give up on manufacturing has not only caused the obvious problems associated with job loss, but it has and is causing an enormous loss of intellectual property assets as well. Nothhaft quotes what Harvard Business School Professors Willy Shih and Gary Pisano told him: “decades of outsourcing manufacturing has left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy.”

Folks, intellectual property is what we have to build on for the future and the loss of manufacturing jobs is siphoning off intellectual property. Soon we will be left with nothing!

How does the siphoning off of intellectual property assets occur? Innovation is not a singular event; it is an ongoing process. Discoveries that lead to scientific breakthroughs that lead to engineering feats in turn lead to more discoveries and breakthroughs and so on. We also know conclusively that early stage discoveries, breakthroughs and innovations do not always (if ever) scale up from the laboratory to engineering draftsman to short run manufacturing to large scale manufacturing the way that might otherwise be anticipated. There will be further discoveries and breakthroughs on every level. So when we innovate here in the United States and outsource any or all of the follow-up stages of innovation the discoveries and breakthroughs that inevitably occur will be owned by those outside the United States. Great Again also drives home that when manufacturing exits R&D funding dwindles and you have an enormous problem. Already 20% of U.S. research and development has moved off shore.

Great Again is an excellent read because it is presented in straight forward fashion. There is no political agenda, no preaching, just solid facts. Nothhaft also interviewed a whose-who of Silicon Valley, including the great and nearly revered Steve Wosniak, the brain behind the genius of the Apple Computer dynasty. If I haven’t scared you enough already, or convinced you to read Great Again, allow me to point out that Wosniak tells Nothhaft that Apple could not receive funding from venture capital firms today because it would be too risky and the people involved didn’t have a strong enough track record. Amazing! One of the most successful technology companies of the last generation would be unlikely to find funding to get off the ground. One of the co-founders of Home Depot provided the same opinion to Nothhaft; namely that Home Depot would be unlikely to attract the venture capital necessary if it were just starting out today.

Ask yourself this: If two tremendously successful companies such as Apple and Home Depot couldn’t get funded today, what does that say about the future of the U.S. economy? We have enormous issues and without a comprehensive and coherent national innovation policy there is little that we will be able to do to turn the tide.

Great Again is already one of the best-selling business books in the country, already the number one book on Inc’s Business List. This is no doubt due to the fact that Nothhaft not only explains the problems in a way that everyone can understand, but he also provides actionable solutions, which is extremely rare.  Sure, anyone can talk about problems, but Hank goes the next steps and provides a road map that can be easily followed; that is if our leaders actually want to put their actions where their campaign rhetoric is.

Peter G. Peterson, former U.S. Secretary of Commerce, has written about Hank’s book: “At a time of growing concern over where the jobs, jobs, and jobs will come from, Great Again reminds us of the central role of start-ups in job creation. It persuasively documents how our regulatory, tax, immigration, patent, and other government R&D policies have not only seriously impaired the growth of start-ups, but the whole job-creation process in America.”

In a world where it is now easier to take a company public in China than it is in the U.S., entrepreneurs are increasingly America’s most endangered species. Hank provides a compelling and relatively non-controversial plan for helping entrepreneurs through tax, education, immigration, intellectual property, and R&D policies that focus what American corporations need in order to thrive here in the United States, creating those American jobs that have seemed so elusive.

If changes are ever to come for the better we all need to be informed and engaged.  So if you read only one book this summer it has to be this book!  When you are finished pass it along or recommend it to friends and family.  The more who know the more likely our leaders will start making intelligent, rationale choices.

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Posted in: Books & Book Reviews, Gene Quinn, IP News, IPWatchdog.com Articles, Patents, Technology & Innovation, US Economy

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

6 comments
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  1. As usual it was a pleasure to read your article. I hope that the messages in the book breaks through to those who do not want to see a double dip before emergency action has to be taken again. I will know that everyone who is in a position to make a difference hears the message when professors who are teaching at public universities do not require direct funding from entrepreneurs who have had to form clusters in their regions in pursuit of a grant from the EDA as a source of funds to start up new businesses and sustain the needs of the community. When public university professors have to look to stock options for their compensation instead of relying on public debt as a source of their standard of living then we will see a turnaround in the amount of innovation that hits the market and contributes to the emerging economy.

  2. Gene –

    This may be a great book filled with wisdom but it will end up, as have so many others, a waste of paper and ink and the time to write and to read it. By October it will be on the $2. cart in front of Barnes and Noble.

    Our government is run by special interests who fought long and hard to create the mess we are in because out of that mess they have become wealthy beyond their wildest dreams. Think of the sayings about ill winds and luck.

    To select one example, what if it could be proven beyond any shadow of doubt that the first step toward recovery would be repealing the Bush tax cuts? Many believe this. Such a plan would have zero chance of passage because many of the members of Congress were elected using substantial contributions from those who received the tax cuts. We could make dozens of examples.

    Great Again may be a formula for saving us from disaster but no one outside a small group will ever bother to listen. To all too many, the price of gas or who won the Stanley Cup is more important than saving the economy. Give us bread and circuses. Let the eggheads go back to their ivory towers.

    Cynical, yes. Realistic, also yes.

  3. tifoso-

    It is hard to argue with your cynical comment. I know this will sound naive, so forgive me in advance. We need to hold back cynical thoughts and do whatever we can to get the message across. I sense now is a different time. We are at the brink and there are clear solutions that can right the economy. My guess is that the White House will get more desperate as the 2012 election nears, and with the sentiment being “throw out the bums” there may be enough in Congress to get something done. At the very least, these solutions need to be a part of the dialogue. What we need is an Contract with America on Innovation.

    -Gene

  4. Tifoso asks the question; What if it could be proven beyond any shadow of doubt that the first step toward recovery would be repealing the Bush tax cuts?

    Tifoso, are you prepared to offer such proof? I keep hearing stuff like the tax cuts caused the meltdown, etc., but I’ll be danged if I can see how the one led to the other. Mr./Ms. T, if you can spell that out, step by step, perhaps you can make a convert.

  5. Ok, ok, the book does quote me (and Gene) in relation to an article written by John Schmid. So, anything that quotes me has to be gospel. Not always but, in this case, it certainly is or should be. I would like to join whatever movement is being started to act on what is suggested in this book. I am a true believer in what the patent system/PTO/Innovation and start-ups means to the U.S.

    The stat in the book that knocks your socks off is in the section about net job growth. US Today had a similar stat and story a few days back. But, it none-the-less bears repeating: start-ups are the only net job growth that occurs in our economy. And, if they go IPO, instead of through acquisition, the job growth is exponentially greater. Acquisition more-or-less kills a start-up.

    What do macro economists always recommend in a downturn: preserve jobs at large companies and give benefits to large companies inasmuch as they are large employers.Well, that’s not where the advantage lies. Large companies trim payrolls, send jobs and know-how outside the US, and the ones that do this are rewarded. This trend is killing the middle class and creating the yawning gap between those who have and those who struggle.

    As for IPOs: Our regulation (SarbOx) post Enron has all but killed IPOs. Small IPOs are what makes the US economy grow and are unique to the US culture of risk. Small companies innovate. It just is. Large companies can’t do it, and don’t. Large companies progressively tweak their business model via committee and consensus, and ignore the seeds of their own destruction. Start-ups have a mission to burn the house down; every day. Such an attitude cannot exist within a large corporation and is snuffed as soon as it appears.

    The time is now. Let’s get moving.

  6. Cowboy –

    You make the same mistake that ever so many first year law students make: you argue with the hypothetical. My statement was a What If? The reader is asked to, for the sake of the argument, to accept the statement as a premise. What If it were so, then what? It does not matter which premise is chosen. Choose cutting back on Medicare or immigration or immediately withdrawing our troops from some remote place. The conclusion will be the same. Congress is too tied into special interests that no solution will be forthcoming.